China

Currency CurrencyChinese Yuan (CNY) Working Time Work Week40 hours Employer Taxes Employer Taxes up to 43%

Hire in China

Get the best talent in China. Let Lano do the heavy lifting. We’ll help you hire the best full-time employees or contractors, saving you from the pain of establishing a legal entity. No need to worry about complex local laws or tax requirements. From compliant contracts to global payroll, we’ve got you covered. 

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The number of products labelled “made in China” is simply overwhelming but the People’s Republic of China is not only the world’s biggest player when it comes to manufacturing. The country is also very popular with international companies intending to grow their remote teams.

Not only are wages in China quite low but legal conditions are quite favourable for employers as employee protection as well as health and safety obligations are not as strict as in other countries. In many cases, employing in China means low employment costs and low wages in exchange for highly-qualified workers.

Basic Facts about China

  1. official state name People's Republic of China
  2. capital Beijing
  3. population 1.44 billion
  4. language Standard Chinese/ Mandarin
  5. currency Chinese Yuan (CNY)
  6. time zone UTC +8
  1. Show public holidays
    01 Jan to 03 Jan New Year
    11 Feb to 17 Feb Spring Festival*
    03 Apr to 05 Apr Tomb Sweeping Festival
    01 May to 05 May Labour Day*
    12 Jun to 14 Jun Dragon Boat Festival
    19 Sep to 21 Sep Mid-Autumn Festival*
    01 Oct to 07 Oct National Day*

    *Due to the extension of these public holidays, the Chinese Government has introduced additional working days on the weekends around these celebrations.

Employment Contract

Under China’s Labor Contract Law, employers have to provide their employees with a written employment contract no later than one month after the employee’s first day at work – different regulations apply for part-time employees. Employment contracts in China can be concluded for a fixed-term, for an indefinite term or for the period required to complete an agreed assignment. The agreement should contain at least the following information:

  • Identification of both parties 
  • Date of commencement and employment duration
  • Workplace
  • Job description including position, duties and responsibilities
  • Basic salary as well as other compensation or benefits
  • Working hours 
  • Total number of holidays
  • Social insurance 
  • Protective measures at workplace
  • Additional legal requirements

Information on probation periods, confidentiality, training etc. are optional.

Probation Period

The length of the probation period depends on the length of the respective employment contract:

  • contract length between three months and one year: maximum one month probation
  • contract length between one and three years: maximum two months probation
  • contract length more than three years: maximum six months probation

Working time

Working Hours and Breaks

Under normal conditions, an employee’s standard working week should be 40 hours divided into five eight-hour days. It is mandatory to give employees at least one proper rest day per week.

Overtime

Overtime work is possible under certain conditions but should not exceed one hour per day – three hours per day in special cases but limited to 36 hours within one month. Any work performed beyond standard working hours is to be remunerated as follows:

  • 150% of normal wages on standard working days
  • 200% of normal wages on rest days
  • 300% of normal wages on public holidays

Payroll

It is common practice in China to pay employees on a monthly basis. 

Minimum Wage

There is no national minimum wage in China. Instead, each Chinese province defines its own minimum wages. It is not unusual that minimum wages even vary within one single province, taking into account the cost of living in specific areas. 

The highest minimum wage rate applies in Shanghai where the current rate is set at CNY 2,480 per month.

Sick Pay

Sick leave and sick pay in China depend on the employee’s length of service with his or her current employer as well as on his or her overall working experience. Sick leave entitlements range from three up to 24 months and sick pay rates lie between 60% and 100% of the employee’s usual salary.

Bonuses

Although not legally required, many employers grant their employees an annual bonus equal to one month’s salary which is usually paid out just before the Chinese New Year, i.e. in early February.

Taxes and Social Security Contribution

Employees and employers in China are subject to the following tax and social security contribution rates (as of 2021):

taxes
employers

25% corporate tax rate

13% VAT (standard rate)

employees

individual income tax rates range from

3% to 45% *

social security
employers

Social security contribution rates in China are location-dependent. In Beijing, for example, contributions amount to 43% of the employee’s salary including:

19% pension 

10.8% healthcare and maternity fund 

0.8% unemployment insurance  

0.4% employment injury insurance

12% housing fund

employees

Social security contribution rates in China are location-dependent. In Beijing, for example, contributions amount to 22.2% of the employee’s salary including:

8% pension

2% healthcare

0.2% unemployment insurance

12% housing fund

Read more

Annual individual income tax rates:

– up to CNY 36,000: 3%

– CNY 36,001 – CNY 144,000: 10%

– CNY 144,001 – CNY 300,000: 20%

– CNY 300,001 – CNY 420,000: 25%

– CNY 420,001 – CNY 660,000: 30%

– CNY 660,001 – CNY 960,000: 35%

– over CNY 960,000: 45%

Employee Benefits

Annual Leave

An employee’s annual leave entitlement depends on his or her length of service. Employees with one or more years of service receive five paid vacation days each year. Employees with a length of service between ten and twenty years gain ten days of annual leave and those who have been working for more than 20 years are entitled to 15 paid days off each year.

In addition, there are seven official public holidays, some of which stretch over several days.

Maternity Leave and Paternity Leave

Maternity leave in China is 98 days of which 15 can be taken before birth. In case of difficult or multiple births, it is possible to extend maternity leave by another 15 days. During maternity leave, the employee receives maternity benefits from the Chinese social security agency. Depending on the province, employers may be required to make a contribution to maternity allowances. 

Despite there being no national law providing for paternity leave, fathers can claim paid leave on the occasion of their child’s birth under provincial regulations. In most provinces, paternity leave is between 15 and 30 days.

Parental Leave

Chinese labour law does not provide for additional parental leave. However, female employees can claim breastfeeding leave which allows them to reduce their daily working time by one hour until the child is twelve months old.

Additional Leave and Benefits

It is common practice among employers to grant (paid) additional leave – usually one to three days – in the following cases:

  • marriage
  • death of a direct family member

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Employment termination

In addition to employment termination by default – i.e. in case of a fixed-term contract – resignation and mutual agreement, an employee may be dismissed due to one of the following reasons (non-exhaustive list):

  • staff reduction and other objective reasons making the employee redundant
  • summary dismissal due to gross misconduct
  • breach of employment contract
  • employee’s underperformance
  • employee’s incapability to work as a result of illness or injury

The minimum notice period for both employee and employer is 30 days. Pay in lieu of notice is possible. 

Except in those cases where dismissal is based on employee behaviour, employees in China are entitled to severance pay which is based on the employee’s length of service:

  • up to six months of service: half a month’s salary
  • between six months and one year: one month’s salary
  • over one year: one month’s salary for each completed year of service

Hiring in China?

Not sure if you should start with a contractor or go ahead and hire a full-time teammate in China? The Lano platform makes it easy to go from freelance to full-time employee. Get expert guidance from the Lano team to compare your options and keep growing.